The rental and leasing industry has been changed forever by the Covid-19 crisis and is facing big structural changes shaped by technology.
A Westpac report on the rental and leasing sector, which hires out cars, household goods, computer and industrial machinery, said it was likely to remain subdued for some time, but longer-term prospects were positive.
The shutdown of the tourism industry saw demand for passenger and recreational vehicles plummet, while machinery and equipment rentals were adversely affected by reduced construction, manufacturing and services activity.
Total industry turnover was $5.1 billion in 2018, and was expected to contract this year, while still outperforming the rest of the economy.
Westpac industry economist Paul Clark said the bigger firms were likely to evolve and flourish, as a cash-strapped economy was expected to make renting and leasing equipment a more attractive option than buying.
“I think there’s going to be deterioration in balance sheets, a deterioration in financial positions, so it becomes cheaper to rent, at least in the short term,” he said.
However, he said many smaller companies were expected to struggle and some would close their doors, particularly those heavily reliant on tourism, such as car rental firms.
Clark said many larger companies had already accelerated their online activity, in order to compete with the increased use of peer-to-peer lending by companies, such as construction firms, looking to make money off idle assets.
“It is becoming a threat to established players, because I am aware that in some cases some of these established players are actually supplying into those peer-to-peer networks.”